CAVA Group, the well-known Mediterranean fast-casual restaurant chain, sent shockwaves through the market this week after releasing its second-quarter 2025 results. Despite surpassing profit expectations, CAVA’s stock plummeted over 20% in after-hours trading—a clear signal that investors are grappling with deeper concerns about the company’s growth trajectory.

At first glance, the headline numbers seem robust. CAVA generated $278.2 million in revenue for the quarter, reflecting a 20.3% year-over-year jump. Adjusted earnings per share came in at $0.16, beating analyst estimates. The company maintained restaurant-level margins around 26.3% and added 16 net new stores, bringing the total to nearly 400 locations nationwide. From a pure expansion standpoint, CAVA’s momentum is unmistakable.

Yet, lurking beneath the surface were signals that caused investors to step back. The most worrying of these was a pronounced slowdown in same-store sales growth—an essential metric for gauging core business health. For the second quarter, same-store sales rose by just 2.1%, far below Wall Street’s expectations of roughly 6%. This shortfall suggests that growth at established locations is starting to sputter, raising questions about demand and customer traffic even as new stores continue to pop up.

CAVA’s management directly addressed these headwinds, with CEO Brett Schulman noting that consumers are “navigating a fog,” a metaphor for rising economic uncertainties and shifting spending behaviors in today’s market. Fluctuating confidence—impacted by everything from policy changes to broader economic fears—appears to be weighing on diners’ willingness to spend on eating out.

Perhaps the most significant blow to investor sentiment was CAVA’s decision to scale back its full-year outlook for same-store sales. The company now projects growth of just 4% to 6% for the year, a notable downgrade from the previous forecast of 6% to 8%. This revision reflects management’s caution in the face of both consumer uncertainty and the tough comparison against last year, when CAVA and its peers benefited from post-pandemic spending surges and price hikes elsewhere in the industry.

Despite the concerning trend in same-store sales, CAVA is not putting the brakes on expansion. The company actually raised its full-year target for new restaurant openings, aiming for 68 to 70 new locations by year’s end—up from an earlier plan of 64 to 68. This move signals confidence in the brand’s long-term appeal and in its ability to capture market share, even if consumer sentiment remains volatile.

For investors, however, the current stock price is a central sticking point. CAVA’s valuation remains elevated compared to many established competitors, meaning the bar for continued high growth is set even higher. Any perception that pace is slowing—and that past growth may be difficult to replicate—can translate into swift and steep share price corrections, as witnessed after this earnings release.

The broader context for CAVA’s downturn is also worth considering. The stock is now down roughly 25% for the year and trading near 16-month lows. Market confidence appears fragile, with analysts divided as to whether the current pullback is an overreaction or the start of an overdue reassessment of CAVA’s future growth potential.

Looking forward, the key questions for CAVA are clear:
– Can the company reignite same-store sales growth in an uncertain economic environment?
– Will aggressive expansion pay off, or simply add overhead without delivering the needed returns?
– Is the current valuation sustainable if the company cannot deliver outsized growth quarter after quarter?

To summarize, while CAVA’s headline results display ongoing expansion and operational strength, the sharp deceleration in core sales growth and the company’s more cautious full-year guidance have given investors pause. The coming quarters will be critical in revealing whether this is a temporary stumble due to macroeconomic headwinds, or a sign of more enduring challenges ahead. Investors and observers will be watching closely to see if CAVA can deliver the consistency and momentum that its ambitious growth story demands.